Do you require land for the payment that is down a construction loan? We purchased a parcel with money and wish to understand if it can be utilized as an advance payment once we submit an application for a construction loan to create a house.

Do you require land for the payment that is down a construction loan? We purchased a parcel with money and wish to understand if it can be utilized as an advance payment once we submit an application for a construction loan to create a house.

The down payment necessary for a construction or construction-to-permanent (C2P) loan differs but is normally 10% to 20per cent. The good thing is that the worthiness for the land may be used for several or area of the advance payment.

As an example, you need a construction or C2P loan for $80,000 if you buy a plot of land for $20,000 in cash and want to build a home with a construction cost of $80,000. In the event that post-construction value of your home is $100,000, this means your equity, which will be exactly like your payment that is down $20,000 or 20percent associated with home value, which probably satisfies the lending company’s requirement. Read More